Required information Exercise 1-9 Using the accounting equation LO A1 [The follo

Question

Required information Exercise 1-9 Using the accounting equation LO A1 [The following information applies to the questions displayed below Answer the following questions. (Hint Use theccounting equation) Exercise 1-9 Part a a. At the beginning of the year, Addison Company's assets are $80,000 and liabilities increase $43,000. What is the equity at year-end? $247000 and its equity is $185,250. During the year, assets Increas AssetsLiabilitiesE 61185.250 37 247000S Beginning Change Ending 80,000 43,000 ences

Explanation / Answer

As per accounting equation,

Assets = Liabilities + Equity

So, at the beginning of the year,

$247,000 = Liabilities + $185,250

So, Liabilities = $247,000 - $185,250

= $ 61,750

Now, at the end of the year,

Assets = Assets at the beginning of the year + $80,000

= $247,000 + $80,000

= $ 327,000

Liabilities = Liabilities at the beginning of the year + $43,000

= $61,750 + $43,000

= $104,750

So, Equity at year end

= Assets – Liabilities

= $ 327,000 - $104,750

= $222,250

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